Companies that use any type of information technology are a prime target for cyber attacks. Nobody is 100% safe from the ever-growing data breach threat, including small businesses in La Canada Flintridge, CA. According to Florida Trend, ransomware attacks alone can cost a business from a few thousand dollars to nearly $1 million, depending on the size of the company and the scope of the damage.
Cyber liability insurance covers businesses against financial loss resulting from data breaches and other IT infringements.
How Cyber Liability Insurance Works
A cyber liability insurance policy covers data breach costs such as:
● Data restoration-This includes money spent restoring or replacing digital databases or software damaged or corrupted through hacking, virus attack, or denial of service (DoS) attack.
● Loss of revenue-It can replace lost income and other expenses resulting from operational shutdown due to a cyber attack.
● Cyber extortion– This policy can pay the ransom demanded by a DoS attacker to release your IT system after illegally seizing it. It can also cover ransom demands to stop an attacker from making public any stolen confidential data. The cost of hiring an expert negotiator is usually covered. However, insurers will only cover ransom payments that are made with their prior approval.
● Notifications-The cost of notifying data breach victims is included. This expense is usually unavoidable as many states have laws requiring businesses to inform their customers of any personal data violations that may affect them. Some policies also cover associated credit monitoring services and call center costs.
● Crisis management– This policy can cover damage control, public relations, and other costs necessary to protect your reputation after a data breach. It includes the cost of enlisting experts like an attorney, forensic accountant, or IT security analyst to evaluate the scope of the data breach.
Cyber Liability Insurance Coverage for Claims and Lawsuits
This policy covers cyber liabilities on a claims-made basis. These include court-awarded damages, settlements, and defense lawyer fees, all within the coverage limit.
Covered liabilities include:
● Network security and privacy– This helps when a data breach victim (such as a customer) makes a claim that a business’s negligence or errors and omissions made the cyber attack possible. Inadequate cybersecurity measures leading to the exposure of sensitive personal data or the failure to notify data breach victims may result in a covered cyber liability claim or lawsuit.
● Electronic media liability– You can utilize this coverage when a third party like a customer or competitor sues your company for libel or slander after you’ve published defamatory electronic data on the web. Breach of copyright and invasion of privacy is part of this coverage.
● Regulatory fines– Cyber liability insurance also covers fines or penalties that a business may have to pay for a deemed breach of data protection laws. It may also pay for defense attorney representation in regulatory proceedings.
Losses That Are Not Covered by Cyber Liability Insurance
There are typical losses/damages that cyber liability policies don’t cover. Examples of these losses include:
● Bodily injury/property damage
● Loss due to fraud or deliberate dishonesty by the policyholder
● Contractual liability
● Acts of war or terror
● Utility failure
● Data breach events prior to the policy’s retroactive date, if applicable
● Cost of upgrading affected IT systems to a higher/better functional level than before the cyber attack
These are some of the critical ways in which cyber liability insurance could protect your business from financial loss after your customer data is breached by hackers. For assistance in finding a custom cyber insurance policy for your business, contact the professionals at Knight Insurance Services in La Canada Flintridge today. We have the resources and expertise to get you the coverage you need.